To avoid misunderstandings, it is recommended that both parties formulate and clearly state the terms and conditions of employment in employment contracts (written employment contracts or employment letters).

The employment contract should include the following:
• Job position
• Scope of work, that is, the responsibilities that must be performed
• Employment start date/ date of work
• Salary and allowance (if any)
• Salary payment period
• Amount of provident fund payable
• Daily / Working hours per week / per shift
• Overtime pay
• Rest days
• Employee benefits, such as annual leave, sick leave and hospital leave
• Termination of the employment contract and notice period. The conditions in the employment contract cannot be lower than what is specified in the Employment Act.

Can an employer change the terms and conditions of employment?

Without your consent, the employer cannot change the terms and conditions of employment. If you do not agree to these changes, you should discuss them with your employer and try to reach an agreement that is acceptable to both parties. If an agreement cannot be reached, either party can terminate the employment relationship after giving an appropriate notice period.

An employment contract refers to an agreement in which one party agrees to hire the other party as an employee; the other party agrees to become an employee and serve the employer. Employers must contribute to their employees’ Central Provident Fund and provide related statutory benefits, such as annual leave and sick leave.
A service contract refers to an agreement that a party accepts a commission and acts as an independent contractor. For example, a self-employed person or supplier accepts a commission to complete a job or project for the company and charges a certain fee. Under this arrangement, the two parties are not in an employment relationship, so the party providing the service is not protected by the Employment Act.

There is no single decisive experiment that can distinguish between employment contracts and service contracts. Some factors to consider when determining an employment contract include:

• Who can decide to recruit and dismiss employees?
• Who pays the employee’s salary? How is the salary paid?
• Who determines the production process, time and production method?
• Who is responsible for providing jobs?

• Who provides tools and equipment?
• Who provides workplaces and materials?

• Is the person doing business for himself or his employer?
• Can the person share any profits, or is he responsible for any risk of loss?
• How to calculate the person’s income and the benefits received?
• Does the person have the right to “price” or value the work?